Oxbridge Re Holdings Limited (NASDAQ:OXBR) Q4 2024 Earnings Call Transcript

Oxbridge Re Holdings Limited (NASDAQ:OXBR) Q4 2024 Earnings Call Transcript March 26, 2025

Operator: Good afternoon. Welcome to Oxbridge Re’s Fiscal 2024 Earnings Conference Call. My name is Matt, and I’ll be your conference operator this afternoon. At this time, all participants will be in a listen-only mode. Joining us for today’s presentation is Oxbridge Re’s Chairman, President and Chief Executive Officer, Jay Madhu; and Chief Financial Officer and Corporate Secretary, Wrendon Timothy. Following their remarks, we will open up the call for your questions. I’d like to remind everyone that, this call is made available via telephone replay until April 9, 2025. Details for telephone replay are included in the press release issued today. Now, I’d like to turn the call over to Wrendon Timothy, Chief Financial Officer of Oxbridge Re, who will provide the necessary cautions regarding the forward-looking statements that will be made by management during this call.

Wrendon Timothy: Thank you, operator. During today’s call, there will be forward-looking statements made regarding future events, including Oxbridge Re’s future financial performance. These forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as anticipates, estimates, expects, intends, plans, projects and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled Risk Factors contained in our Form 10-K filed today, March 26, 2025, with the Securities and Exchange Commission.

The occurrence of any of these risks and uncertainties could have a material adverse effect on the company’s business, financial condition and the volatility of our earnings, which in turn can cause significant market price and trading volume fluctuations for securities. Any forward-looking statements made on this conference call speak only as of the date of this conference call. And except as required by law, the company undertakes no obligation to update any forward-looking statements contained on this call or in any company presentation even if the company’s expectations or any related events, conditions or circumstances change. Now, I’d like to turn the call over to our Chairman, President and Chief Executive Officer, Jay Madhu. Jay?

Jay Madhu: Thank you, Wrendon, and welcome, everyone. Thank you for joining us today. Let me start by saying, we are proud of the significant steps we have taken to fortify and diversify our business. While we are solidly entrenched in the RWA, Web3 space, where we issue tokenized reinsurance securities in an RWA, or real-world assets. Our core business remains reinsurance, where we write fully collateralized policies to cover property losses from specific catastrophes, and because we write fully collateralized contracts, we believe we can compete effectively with larger carriers. We specialize in underwriting low frequency high severity risks, where we believe sufficient data exists to efficiently analyze the risk/return profile of reinsurance contracts.

Our objective is to achieve long-term growth and book value per share by writing business on a selective and opportunistic basis that will generate attractive underwriting profits relative to risk. Building on the stable reinsurance foundation, we began to diversify our business in 2022. We expanded our business portfolio by establishing SurancePlus Inc., our new subsidiary focused on RWA Web3 technology. SurancePlus specializes in democratizing real-world assets or RWAs, offering tokenized reinsurance securities as an alternative investment opportunity. These securities leverage blockchain technology to ensure complete transparency and compliance with SEC guidelines, representing a significant advancement in the digital security market. Consequently, this initiative aims to broaden investor participation, extending opportunities beyond what traditionally has been a select group of ultra-high-net-worth individuals.

Crucially, the establishment SurancePlus was achieved without incurring new debt, reflecting our efficient approach to diversification. We are enthusiastic about the prospects of these new investments and remain committed to keeping our stakeholders informed of the progress in the forthcoming quarter. Looking ahead, we intend to position Oxbridge as a prominent player in the Real-World Asset or RWA and Web3 sector. In summary, we maintain a strong sense of optimism regarding the long-term outlook of our core reinsurance business alongside the successful integration of SurancePlus as we embrace the RWA market more comprehensively. Now, I’ll turn things over to Wrendon to take us through our financial results.

Wrendon Timothy: Thank you, Jay. I’d like to remind you that our typical contract period is from June 1 to May 31st of the following year. Net premiums for the three months ended December 31, 2024 were $595,000 compared to $523,000 in the same prior year period. For the year ended December 31, 2024, net premiums increased $2.3 million from $1.25 million in the prior year. The increase is primarily attributed to the higher rates on contracts as well as to the prior period recognized in only seven months of premiums due to the acceleration of premiums and contract in force at December 31, 2022. In contrast, the current year ended December 30, 2024 accounted for 12 months of premiums. Our net investment and other income was $654,000 for fiscal 2024, before recording our unrealized loss of $2.1 million on our other investments the result of our remeasurement of our investment in Jet.AI at fair value, which was due subsequent to year-end, which would significantly reduce volatility in our earnings going forward.

We also recognized a $260,000 negative change in fair value of our equity securities as of December 31, 2024, decreasing from the 38 positive change in prior year. All these factors taken together resulted in total revenues of $546,000 for the fiscal year ended December 31, 2024 compared to a negative $7 million in the prior year. For the fourth quarter of 2024, total revenue was $422,000 compared to negative $1.9 million in the same period last year. Total expenses including loss and loss adjustment expenses policy acquisition costs and general and admin expenses were down in the fourth quarter and fiscal year 2024 compared to last year. The decrease in 2024 is due to expense fluctuations along with efficiencies associated with SurancePlus offerings in addition to previous recognition of costs associated with Maxim equity distribution agreement in the prior year with no such cost in 2024.

For the three months ended December 31, 2024, the company generated a net loss of $460,000 or $0.05 per basic and diluted loss per share compared to a net loss of $2.67 million or $0.46 per basic and diluted loss per share in the fourth quarter of 2023. For the year ended December 31, 2024, the company incurred a net loss of $2.7 million or $0.45 per basic and diluted loss per share compared to a net loss of $9.9 million or $1.69 per basic and diluted loss per share in the prior year. The decline in Q4 in fiscal 2024 is primarily due to the decrease in the negative change in the fair value of investment in Jet.AI as well as the company accounted for non-controlling interest portion of income. As we have discussed before and over investor calls, we use various measures to underline the growth and profitability of our business operations.

For reinsurance business, we measure underwriting profitability by examining our loss ratio, our acquisition ratio, our expense ratio, and our combined ratio. Our loss ratio, which measures our underwriting profitability, is the ratio of losses and loss adjustment expenses incurred to net premiums earned. The loss ratio remained consistent at 0% for the year ended December 31st, 2024 and 2023. Our acquisition cost ratio, which measures operational efficiency compared to policy acquisition cost to net premiums earned, the acquisition cost ratio decreased marginally to 11.1% for the three-month period ended December 31st, 2024 and 11% for the fiscal year 2024, from 11.7% for the three-month period ended December 31st, 2023 and 11.2% for fiscal 2023.

Our expense ratio, which measures operating performance, compares policy acquisition costs, and general and admin expenses with net premiums earned. Expense ratio decreased from 102.3% for the three-month period ended December 31st, 2023 to 83% for the quarter ended December 31st, 2024 and from 185.2% for the year ended December 31st, 2023 to 94.3% for fiscal 2024. The decrease is due to the higher levels of premiums earned and lower general admin expenses incurred when compared with the prior year. Now, turning to the balance sheet, our investment portfolio decreased to $113,000 at December 31st, 2024 from $680,000 at the prior year end, primarily as a result of the sale of two equity securities and a decrease in fair value of the equity securities during the year ended December 31st, 2024.

Other investments decreased from $2.48 million to $40,000 due to fair value changes in our investment in Jet.AI in which the company had an equity investment measured at fair value, which is offset by the proceeds on redemption of Series A1 preferred stock. Cash and cash equivalents and restricted cash and cash equivalents increased to $5.9 million at December 31st, 2024 from $3.8 million at prior period end. The increase is primarily due to new collateral deposits for treaty year ended May 31st, 2025, more than offset in funds being released from the underlying trust for the treaty year ended May 31st, 2024. Subsequent to year-end the company completed a reverse direct offering, raising gross proceeds of $3 million. Now, I’ll turn the call back over to Jay to wrap-up before we take your questions.

Jay?

Jay Madhu: Thank you, Wrendon. As highlighted earlier in today’s discussion, we have implemented decisive and substantial measures through this year — throughout this year and last to fortify and diversify our operations. In December 2022, we established SurancePlus with the objective of tokenizing securities representing fractionalized interest in reinsurance contracts underwritten by our reinsurance subsidiary. In the second quarter of 2023, we successfully concluded the initial offering of the security tokens/DeltaCat Re. This was issued on the Avalanche blockchain for now. Furthermore, as previously reported, investors in DeltaCat Re received returns exceeding 49%, surpassing the initial 42% projection, despite challenges posed by Hurricane Idalia, which made landfall as a Category 3 hurricane in 2023.

We believe these are the first tokenized reinsurance securities backed by a publicly-traded company, a milestone that highlights our ability to lead through innovation. SurancePlus is poised to democratize access to reinsurance as an alternative investment avenue, leveraging the inherent advantages of blockchain technology to cross sophisticated digital securities. Our tokens aim to facilitate broader investor participation, ensuring their interests are securely and transparently recorded on the blockchain. By opening access to an asset class historically limited to a select few due to high financial barrier entry, SurancePlus breaking new ground. Leveraging Reg D and Reg S frameworks investors can now enter this unique asset class within minutes effectively completing AML, KYC and document signing requirements.

Essentially, we have democratized access to reinsurance. Additionally, Oxbridge Re Holdings has initiated a strategic review process forming a special committee of Board — of the Board to consider a full range of strategic alternatives for the company and its Web3 subsidiary SurancePlus Holdings Limited. This process may include a sale, spin-out merger, divestiture, recapitalization or other strategic transactions are continuing to operate as a public independent company. Subsequently in Q1 of this year our Board approved — our Board of Directors approved the inclusion of Bitcoin and Ethereum and potentially other cryptocurrencies as part of our corporate treasury reserve strategy. This decision reflects our commitment to innovation, diversification and long-term value creation particularly as blockchain-based assets continue to gain global adoption.

We believe Bitcoin in particular has demonstrated its strength as a resilient store of value. This strategic step complements our broader blockchain initiatives including the continued growth of SurancePlus and our tokenized reinsurance offering. In recent developments, SurancePlus last completed a private placement of 287,705 participation shares represented by digital token EpsilonCat Re under three-year participation share investment contract raising approximately $2.9 million. Additionally, we recently announced a strategic partnership with Plume a leading blockchain platform supporting over $4.5 billion in assets and more than 18 million unique wallet addresses. This collaboration significantly expands the potential distribution channel of our tokenized reinsurance offering and strengthens our presence in the real-world tokenization ecosystem.

We believe this relationship will enhance accessibility and visibility of our digital securities among both institutional and retail investors. Building on our newly announced partnership with Plume, we remain focused on identifying and forming an additional strategic relationships that can accelerate our growth in the RWA tokenization and Web3 infrastructure. These partnerships have intended to broaden our distribution capabilities and strengthen investor access to our innovative digital securities. While this season has been an extremely active one we don’t believe we will be impacted by Helene. On Milton, we cannot comment on the outcome as we have not received finalized data as we continue to monitor any new development that may impact our contracts.

SurancePlus is well-positioned with substantial growth potential for our shareholders. We are proud of this accomplishment and look forward to this exciting new entity diversifying and accelerating our growth in the RWA space in the coming years. These compelling opportunities not only augment our business, but also enhance our risk profile strategically positioning us to capitalize on growth with emerging technologies. We are especially enthusiastic about the anticipated value the investments hold and believe they offer to our shareholders. As previously mentioned, we have made the turn positioning Oxbridge as an RWA and Web3 focused company leveraging the significant progress we have achieved over the last two years. Forecast suggests an extraordinary expansion in the RWA tokenization ecosystem.

This growth trajectory is fueled by the escalating adoption of tokenized RWA market over the next decade with estimates exceeding $10 trillion. This has been reinforced further recently as securitized announced and have secured $47 million funding led by Blackrock in blockchain technologies and blockchain technology across various traditional financial sectors, including fiat currencies, equities, government bonds, and real estate. Endorsements from institutions like Blackrock, Bank of America, USB [ph], State Street, Franklin Templeton, Deutsche Bank and Credit Suisse, further affirmed the transformative potential of the tokenization in enhancing financial infrastructure efficiency reducing costs and optimizing supply and distribution chains.

In our upcoming 2025, 2026 targeted offering, our third consecutive year of offering security back tokenization reinsurance, we will be expanding our product suite with the launch of two targeted securities. A balance yield tokenized security targeting a 20% annual return and the high yield tokenized security targeting a 42% annual return. This 2-tiered structure is designed to appeal to a broader range of investor preferences and risk profiles furthering our mission to make institutional-grade reinsurance accessible through blockchain-powered real-world assets. This marks a meaningful step forward in democratizing reinsurance and accelerating the growth of our digital footprint in the evolving RWA ecosystem. Moreover, recent industry analysis from firms such as Standard Charted in collaboration with SurancePlus anticipate a substantial surge in the tokenized asset market potentially reaching $30 trillion by the year 2034.

As pioneers in this evolving landscape, we hold a strong sense of optimism regarding the value our rebranding efforts will unlock for our shareholders. We remain steadfast in our commitment to seizing the opportunity presented by this dynamic market shift. With that we are ready to open the call for questions. Operator, please provide the appropriate instructions.

Q&A Session

Operator: Thank you. We will now be conducting a question-and-answer session [Operator Instructions] First question is from Allen Klee from Maxim Group. Please go ahead.

Allen Klee: Yes. Hi. Congratulations on another quarter with no losses incurred. Could you cut talk on that about what’s your underwriting risk management efforts are that have resulted in that in the last couple of quarters?

Jay Madhu: Hey, Allen. Thanks for getting on the call. Part of what we do at Oxbridge is in reviewing contracts not only do we underwrite these contracts internally but we also are follow-on reinsurer, meaning we follow – we take a look and see who else is on our contracts, which then solidifies our internal decision of taking these contracts. So – and that’s traditionally how we’ve always done it and we continue to do that. So not only do we take a look at who is also a part of these layers that we’re taking or contracts that we’re taking, we also look to see if the contract is adequately priced. If a contract is adequately priced that further affirms the decision to go forward. And in years gone by look, we’ve actually turned away contracts.

We actually have not written contracts because for one reason or the other we didn’t believe in it. So last year’s contracts where we had targeted 42% and paid out 49% were a testament to our underwriting even though we had a Category 3 Hurricane that hit the state of Florida. This year, the year is not over. We’ve had substantial hurricanes hit the state of Florida. The year is not over. The treaty year is not over. We continue to monitor it. We continue to see where we are. And as time goes on, we’ll know more. But so far, so good.

Allen Klee: That’s great. And then for the time — the 2025/2026 tokenization where you’re doing a targeted 20% and 42% two offerings. Is there a general time frame where you’re hoping to get this done?

Jay Madhu: Yeah. So in very short order, short answer to a short question is very quick. We are actively looking to grow that opportunity and to get dollars in. Anybody interested in doing this would go to our website, which is suranceplus.com, go through our documents over there, they can either — if they’re familiar with the offering, they can click on the invest now tab, and it takes them into our partner tab where they can do their sign up, do their AML, KYC within minutes, DocuSign and wire in their funds. And funds will actually go live on June 1 into reinsurance contracts into whichever token that they want, which would be either the 20% or the 42% token. But as a sweetener over here to make sure that people aren’t missing out on any investment income, on any dividend income where they would keep in their accounts.

Any monies that come in between now and June 1, where it goes live into reinsurance contracts, we offer them a 3.5% dividend annualized. Thus, their money is not sitting still. It’s making — it may not be a whole lot, but at least it’s making something. So we’re actively working towards raising that capital.

Allen Klee: Okay. That’s great. And then I’m just trying to think from an Oxbridge Re perspective, as you raise more money, third-party money through these tokenizations, does that essentially like reduce your risk profile in a sense that you’re not taking the same loss risk for that type of money, but you’re still getting a fee on it, so it improves kind of the risk profile of your company?

Jay Madhu: 100%. So in years gone by, we would only put Oxbridge money to work into these reinsurance contracts. Over the last few years, we have continued to do a little bit of that with Oxbridge money, but we’ve also included outside third-party funds. So as we go forward, there’s two things that Oxbridge has improved and made the turn towards. Number one, we moved from your traditional reinsurer to a Web 3/real-world asset company, offering tokenization as the underlying asset, reinsurance tokenization or the underlying asset being reinsurance contracts. Number two, what we’ve also done is turned the risk profile of our business. So instead of having only our money at risk, and we will always have a small portion of our funds at risk, we have to do it, right, because you have to eat your own cooking.

So not only do we put our funds into the company, but also taken third-party monies, lowering our risk profile, but yet making money on the monies that come in. So we’ve taken two solid turns in this business, which I believe as we go forward will prove exceeding you well for Oxbridge and SurancePlus.

Allen Klee: Got it. Thanks. And then very interesting, but if you look at the Florida P&C insurance market, which had been tough, it seems like it’s getting a little better. Can you comment on that?

Jay Madhu : Yes. So the way, I think, the way we look at this, right? So, in the Florida market, $0.45 out of every $1 that an insurance company takes in, so $0.45 of every $1 goes to paying reinsurance. That goes to pay out reinsurers such as us. So, by having a risk profile of an asset, if you have an asset that pays out a substantial dividend, if by doing what we’re able to do, two things might happen, a, to your point has the market improved slightly time will tell. It may come down by one point or two, it may go up by a one point or two. But still $0.45 is $0.45, that’s pretty chunky, right? But doing it the way we’re doing it, and I know I’m kind of expanding a little bit to on your question, even if the market softens a little, it’s probably a good thing.

The not only will the state of Florida or the insurance — people who buy insurance benefited in large, because the cost of reinsurance comes down. But with doing what we’re doing, which is democratizing and asset class, we will at some point in time — and look we’re now mavericks in what we’re doing, but the world will start doing, this in my opinion, in a larger way and we will be part of that world as well, but we’ll have first-move advantage. But by doing it the way we’re doing it, we’re increasing the ability for new money to come in. And people in any part of the world can invest smaller dollar amounts, they don’t need to invest millions and millions of dollars you’re going to get a seat at the table. So, as more capital comes into this ecosystem, it will move the price down slightly.

But in the meantime, Oxbridge is well positioned to take care of this right to make it take advantage of a massive asset class a $700 billion TAM business, where we can substantially grow our opportunity. And I suppose in a different way just say take advantage of the opportunity that’s facing us.

Allen Klee: Right. And then going back to the — so as you’re raising third-party money and it potentially be attractive to investors, the way that in theory you’ll make money then is you get a management fee. Does it reduce like — do you — like if there’s losses on third-party money does that flow through your income statement? Or is that not on your income statement?

Jay Madhu : No, it’s not. It’s not.

Allen Klee: Okay. Okay. And just one other thing on the tokenization, those — or maybe if you talk about the 20% token …

Jay Madhu: Yes.

Allen Klee: … offering versus 42%. Just in terms of — is the way to think of it kind of that like, the risk profile for the 20%, one is maybe around half of the other one?

Jay Madhu: Yes potentially. So the way reinsurance looks, there’s something called a tower. So on the bottom of the tower, you have what would — what most people would think of as they’re deductible. And as the losses grow, they will go up the tower into the various different layers. So the way to think of this is the 42% layer, would be affected before the 20% layer. And our 40% — on 42% layer is not that — it doesn’t sit directly above that deductible, so to speak, it’s still there. But the 20% targeted layer, is obviously above that. So the risk profile is a lot lower than the 42% targeted return token, and thus in my opinion, a lot more stable. The reason for us including this token or targeting this profile over here is, while we have traditionally always worked in this high-yield environment as a company, what we found over the year of talking to various different folks that’s a larger group there’s a larger subset of group of people family offices hedge funds and the like, high net-worth individuals, who may not want to barbell their portfolio in a position where they would take 42% risk.

They’ll take — they don’t mind taking a lower risk profile and get a more sustainable or more balanced yield. So, in my opinion it works well, in either or, it just depends on the risk profile that somebody comes up with or comfortable with.

Allen Klee: Okay. Now if somebody was trying to like, try to average out what potential losses could be overtime. Is there any way to think about — generally it’s like probability of I guess, weather events or Cat 3 or higher and then what the potential severity of them could be. And then, when your particular coverage would kick in, is there anyway to think about like over like a five, 10 years if you look at on average what if it was — if the same amount — if it was an average amount of what that might be for you or …

Jay Madhu: Yeah.

Allen Klee: … some way to think about it?

Jay Madhu: Yes. So the way we view this is in the reinsurance space and majority of our business is done in the state of Florida. So when you take a look at — when a person takes a look at the state of Florida, the significant amount of data that exists in determining or taking a look and seeing how things could potentially work. So Category 3 storms, is what does the damage. And when a Category 3 storm comes through, a couple of things need to happen: A, it needs to be Category 3 which is 112-mile hour winds, 112 mile-an-hour winds disrupt shingles et cetera and bad things happen potentially after that. So it has to make land. And it has to make land in a populated area. So the statistical data that I alluded to earlier, if you take a look at do information that’s put out by Noah, you’ll find since 1952 approximately 82% of the time nothing happens.

The remaining 18% of the time, but I say nothing happens as in a Category 3. You don’t have a Category 3 or above that hits the state of Florida. In the remaining 18% of the time, there has been, like I mentioned, the storm has to hit or make landfall. Last year, we had a Category 3 that made landfall and it was a nonevent for us. So it goes to show underwriting matters. We take a look at statistical data and the statistical data will prove that not every year. But you don’t have a Category 3 storm that hits land, makes land or makes land in a populated area. Majority of the time nothing happens. And in those years, investors and companies do really well. So this is a business that people should look at one year at a time. We take a look at this over the test of time, how it works, and how it makes money.

The tokens are done in terms of people can decide whether they want to do it on a regular basis. So our tokens are structured in such a way where there are three-year token with a one year out. So people can say, okay, I want to only look at this as a one year horizon and decide after that whether they just want to continue to roll their money into the next year, or take some piece of it or all of it or just roll it through. And it’s tax advantage, right, because we’re a Cayman-Island-based company. So statistically, you don’t have hurricanes that hit the state of Florida every single year. There are few and far between, and in the years that things go wrong, they go wrong. But majority of the time, and the sufficient data that exists over there it’s a solid business done with.

Allen Klee: Very interesting. Okay. That’s was all my questions. Thank you and congrats on your execution.

Jay Madhu: Thank you, Allen.

Operator: [Operator Instructions] Next question is from Kent Engelke from Capitol Securities. Please go ahead.

Kent Engelke: Hey, Jay. Hey, Wrendon. Relatively simple question. You’ve been doing a lot of presentations to various groups. How are those presentations been going? What has been the reception?

Jay Madhu: They’ve been received well. So initially, we were targeting the crypto type of conferences. And now what we’re also doing is we’re targeting family office-type conferences, because what we’re seeing in the crypto there’s two parts of our business, right? One is the blockchain world or the crypto world, where you have to have people understand what you do and who you are and so on and so forth and we’re making some great strides. We’ve talked about stroking some deals with a company called Plume. We’re working on others and as time goes forward that will come forth, which I think will be very accretive to what we’re doing. And then the family office section over there, these are high net worth individuals or family offices that are looking actively, and they have a longer-term horizon of what they’re looking for, some that don’t mind taking risk and some that are — that want to balance risk.

So in my opinion, both are needed. You can’t do one or the other, and that’s exactly what we’re doing and it seems to be going really well — well received.

Kent Engelke: Great. Thank you.

Jay Madhu: Thank you so much, Kent.

Operator: [Operator Instructions] If there are no further questions, I’d like to turn the floor back to management for any closing comments.

Jay Madhu: Thank you for joining us on today’s call. Before we conclude, I would like to extend my gratitude to our employees, business partners and investors for their unwavering support. I particularly want to acknowledge our dedicated Oxbridge team and SurancePlus team, whose extensive expertise has been instrumental in navigating and advancing our business, amidst these challenging circumstances. We anticipate providing you with further updates on our progress, during our next call. And should you have any additional questions, please do not hesitate to reach us any time. Once again, thank you for your time, attention today and for your outgoing – sorry, your ongoing interest in Oxbridge. Operator?

Operator: This concludes today’s teleconference. Thank you for your participation. You may disconnect your lines at this time.